Leaders focus on policy parity for carbon capture technology

When it comes to carbon capture, innovative technology exists, but the financial and policy support needed to accelerate its deployment is lacking. 

At a recent Carbon Capture, Utilization & Storage (CCUS) Conference attended by leaders of industry, federal and state agencies, and environmental organizations, one theme that emerged is the importance of policy parity with other low- and zero-carbon energy technologies like wind and solar to advance widespread deployment of CCUS technology. 

Essential Technology

We know that CCUS technology is essential to meet our mid-century climate goals. In fact, without CCUS, mitigation costs will rise by 138 percent.

Exchange Monitor, the organizer of the CCUS conference, noted that it is “an extremely important technology, enjoying a bit more spotlight on the heels of the Paris climate change agreement.” Many nations specifically referenced CCUS technology in their Nationally Determined Contributions to the agreement, including Canada, China, Norway, Saudi Arabia, the United Arab Emirates, and the United States.

Even as nations diversify their energy portfolios, fossil fuels are expected to serve 78 percent of the world’s energy demand in 2040. The most recent Energy Information Administration analysis suggests that global energy consumption is expected to rise 48 percent over the next 30 years.

Clearly, there will be a need for CCUS technology to be widely deployed, in both the power and industrial sectors. Industry, including refining and chemicals, steel, and cement production, contributes roughly 25 percent of global emissions and there are no practical alternatives to CCUS for achieving deep emissions reduction in this sector.

CCUS project development is not on track, however. The most recent International Energy Agency (IEA) Tracking Clean Energy Progress report notes: “No positive investment decisions were taken on CCUS projects, nor did any advanced planning begin in 2015, resulting in a fall in the total number of projects in the development pipeline.”

Since a project can take five to 10 years from conception to operation, financial and policy support is critical now, the EIA adds. The report concludes: “As with other low-carbon technologies, the market for CCS projects in most regions will be created by policy and regulation.”

Policy Parity

That conclusion was echoed at the conference by Dr. Julio Friedmann, the Senior Advisor for Energy Innovation at the Lawrence Livermore National Laboratory and former Principal Deputy Assistant Secretary for Fossil Energy at the U.S. Department of Energy. He said the financing challenge for CCUS projects “is fundamentally a policy issue; this is not a technology issue.” Barry Worthington, Executive Director of the U.S. Energy Association, emphasized at the conference that “providing identical fiscal tools for all no-carbon/low-carbon technologies reduces market distortion.”

Policies that would accelerate the deployment of CCUS technology include:

  • Stronger federal and state incentives for carbon dioxide enhanced oil recovery (CO2-EOR)
  • The inclusion of CCUS technology in state clean energy standards
  • Funding for continued CCUS research, development, and demonstration
  • A price on carbon

These policies would help overcome the barriers that innovative CCUS projects face, such as higher cost and higher perception of risk by investors. The cost reductions and performance improvements experienced by the wind and solar energy industries demonstrate that these kinds of policies (tax incentives, renewable portfolio standards, etc.) can accelerate the deployment of low- and zero-carbon energy technologies.

What policy parity means is sustained public sector support through the process of achieving a declining cost curve: from deploying initial first-of-a-kind CCUS technologies in both power and industrial applications to driving deployment of next-of-a-kind projects. It also means sustaining R&D on CCUS technologies so that low- and zero-carbon energy technologies are ultimately competitive without incentives.

As more CCUS projects come online, opportunities for cost reductions become apparent. SaskPower estimates it can save up to 30 percent on future CCUS units at the Boundary Dam power plant. 

Finally, there is significant support for accelerated deployment of CCUS technology. C2ES co-convenes the National Enhanced Oil Recovery Initiative, which is a broad and unusual coalition of executives from the electric power industry; state officials; and environmental and labor representatives, all of whom support improved policy for CCUS technology in the United States. Based on our experience, and as expressed at the conference, policy parity needs to be an essential component of future federal and state efforts on climate to meet our agreed-upon goals and to match the growing need for CCUS technology.